AQ Stock Up Nearly 40% On Acquisition News: What We Know

Looking at Yahoo Finance’s trending tickers of the day, you will see Aquantia Corporation (NYSE:AQ). At the time of writing, AQ stock is up nearly 40% on the NYSE.

Here’s what we know about the AQ stock surge.

AQ Stock Soaring—But Why?

Earlier this morning, Aquantia reported its earnings for its fiscal first quarter of 2019. While the results were worse than Wall Street was expecting (AQ reported a loss of $0.37 per share on sales of $17 million), AQ stock is enjoying a bounce Monday. And that’s because, in addition to the Aquantia earnings, the company said it is going to be acquired.

The company buying Aquantia Corporation is Marvell Technology Group (NASDAQ:MRVL). On Monday, Marvell said it is going to buy each outstanding share of Aquantia for $13.25 cash. The reason behind the acquisition, according to MRVL, is that it will “fuel Marvell’s leadership in the transformation of the in-car network to high-speed Ethernet” over the next ten years. Matt Murphy, CEO of Marvell, also said: “Aquantia extends our reach in the rapidly emerging Multi-Gig segment of network infrastructure.”

The acquisition is forecasted to take place before the end of 2019; and while it’s good news for Aquantia shareholders, Marvell has some negatives to consider. For instance, the fact that Aquantia has not made a profit in five years is forecasted to do little to help Marvell Technology’s earnings. And it seems Marvell shareholders have already clued into this.

While AQ stock is trading at $12.96 at the time of writing, putting it up 35.51%, MRVL stock is down 1.56%.

Takeaway

What do you think about Marvell Technology buying Aquantia? Do you think it will negatively impact Marvell’s earnings? As we move forward in 2019, it will be interesting to see if the acquisition does what MRVL hopes, or if the opposite happens.

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